philanthropy

International Day of Peace has been observed around the world on 21 September every year since 1982. The United Nations (UN) General Assembly established this day to coincide with its opening session, which is held on the third Tuesday in September. According to the UN General Assembly, September 21 commemorates “devotion to strengthening the ideals of peace, both within and among all nations and peoples.” In 2001, by unanimous vote, the General Assembly established September 21 as an annual day of non-violence and cease-fire.

The theme of this year’s commemoration, “Partnerships for Peace – Dignity for All,” aims to highlight the importance of collaboration between all segments of society and to strive for peace. The theme also highlights a shift in the way the UN and other international organizations view the sources of foreign assistance. Over the last 30 years, private giving has surpassed ODA and now accounts for nearly 80% of development assistance. The work of the UN would not be possible without thousands of partnerships between the private sector and civil society.

2015 International Day of Peace Poster (Source: UN)

Following this year’s International Day of Peace, several major multinational corporations from a variety of industries partnered with the UN’s World Food Programme (WFP) to help raise awareness about the vital role that food assistance plays in creating a more peaceful world. These companies donated digital and television network time for a 30 second advertisement that shines a spotlight on WFP’s work. The advertising campaign, currently airing in 38 countries, is meant to show consumers how they can support the refugees and displaced people who are struggling to feed their families. According to WFP Executive Director Ertharin Cousin, “Food assistance plays a powerful role in times of conflict by saving lives and alleviating suffering. Food brings and keeps families together. Food security gives families hope during desperate times while eliminating the need for families to resort to extreme and harmful measures as the only option for survival.” The WFP’s emergency response fund will use the money raised by this effort to help its most critical operations, like those in Syria, Iraq, South Sudan and Yemen.

McDonald’s is spearheading the multi-million dollar Peace Day. When the fast food corporation approached the UN to discuss a potential partnership, UN officials asked the company to raise awareness of the refugee crisis and encourage people to donate to the WFP. McDonald’s CEO Steve Easterbrook did not hesitate and issued a statement: “If anyone can help an international effort to help feed refugees and the fight against hunger, it’s us.” McDonald’s went on to enlist the support of global philanthropy leaders like Google, Facebook, DreamWorks Animation, United Airlines, MasterCard, OMD, and Twitter, as well as other food and beverage giants like Cargill, McCain Foods, and Burger King.

The WFP has been outspoken in its praise of McDonald’s and its partners for their efforts in the Peace Day campaign. Jay Aldous, WFP Director of Private Sector Partnerships, noted that “The private sector has a significant role to play in ending hunger and promoting peace…And this global effort is a powerful example of brands coming together with one voice to make a tangible impact in the lives of vulnerable people.” As conflicts in the Middle East escalate the refugee crisis and stretch humanitarian resources, McDonald’s can be commended for both the timeliness and scale of its campaign.

In collaboration with WFP, McDonald’s and its Peace Day campaign partners illustrate the ever-growing need and impact of private sector philanthropy in global humanitarian assistance. As Ms. Cousin noted, “Humanity has one future together. This effort provides a great example of people and companies joining forces to make sure we achieve the goal of a zero hunger future.”

The Brookings Institution and the Organization for Economic Co-operation and Development (OECD) recently partnered to present a talk on utilizing public-private partnerships (PPPs) in order to effectively implement the United Nations’ (UN) Sustainable Development Goals (SDG). The SDGs are a list of goals, proposed by the UN, that target issues related to health, poverty, hunger, inequality, education, and climate change. According to the expert panel, partnerships connect decision-makers at the global level with the private sector, local governments, and civil society in an effort to capitalize on their specific strengths and balance their weaknesses.

Bill Gates speaking at a press conference at the end of the GAVI Alliance pledging event

For example, Gavi, The Vaccine Alliance, is a PPP that provides access to vaccines in developing countries. The major players in this alliance consist of the World Health Organization, UNICEF, The World Bank, and the Bill and Melinda Gates Foundation. Together, these organizations have successfully contributed scientific research, vaccines, and financial tools. According to Gavi, “Since its launch in 2000, [the alliance] has helped developing countries to prevent more than 7 million future deaths…Gavi support has contributed to the immunization of an additional 500 million children.” Gavi’s objectives were strategically implemented to produce results that protect developing populations and improve healthcare, which aligns with SDG 3 that aims to “ensure healthy lives and promote well-being for all at all ages.”

Partnerships are arguably the driving force behind the successful implementation of the SDGs. Governments are often slow and unreliable, while existing institutions like private corporations and civil society organizations have “on the ground” experience navigating the challenges inherent to their industry. The success of a PPP is determined by inclusivity, local implementation and ownership, transparency, accountability, political engagement, and strong focus on results. According to a study conducted by the OECD, “effective partnerships must have strong leadership, be country-led and context specific, apply the right type of action for the challenge, and maintain a clear focus on results.”

The SDGs also focus on more specific goals such as improving infrastructure, conserving oceans, and sustaining energy, which leaves room for partnerships to narrow their focus and innovate, particularly in the private sector. According to Devex, “Business leaders are still trying to understand the concept of sustainability, too, and how to integrate it into their business models.” The ODA method of developed countries donating funds to developing countries is ineffective since monetary aid does not specifically encourage the creation of new and sustainable systems. According to the Wall Street Journal, “Over the past 60 years at least $1 trillion of development-related aid has been transferred from rich countries to Africa. Yet real per-capita income today is lower than it was in the 1970s.” As is often the case, this money is lost in transit and never reaches the local level due to corrupt bureaucracies and weak relations with civil society organizations. Financial contributions from the private sector, when combined with effectual and enabling political leadership, move beyond temporary alleviation to foster a more permanent impact.

Public-private partnerships are a vital part of Goal 16, which seeks to “promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels.” Ultimately, PPPs allow for a more inclusive and communicative atmosphere conducive to tackling important development issues on a more direct and practical platform that enables self-sufficiency and citizen accountability. If the SDGs are to be achieved, the vital role of PPPs cannot be ignored.

Last month, representatives at the United Nations Third International Conference on Financing for Development agreed to a number of proposals to fund the upcoming Sustainable Development Goals. Collectively known as the Addis Ababa Action Agenda, these proposals cover a range of financing sources, from domestic tax revenues and official development assistance to private sector financing and philanthropy. The Agenda also included measures to support international trade and capacity building. World leaders now hope that the financing mechanisms laid out in the AAAA will encourage countries to adopt both the SDGs and a climate change accord scheduled for negotiation in Paris this December.

The SDGs are a proposed set of 17 goals that are meant to provide benchmarks for a variety of development issues over the next 15 years. The goals cover poverty, hunger, health, education, gender equality, energy, the environment, and a host of other global challenges. Each goal is accompanied by a number of targets that serve as tangible metrics of a country’s progress towards the SDGs. These new goals are a follow up to the Millennium Development Goals, a 15-year set of eight benchmarks that world leaders agreed to back in 2000. To improve their drafting process for the new goals, the UN organized the largest consultation program in its history that combined government input with surveys of the general public.

The Addis Ababa Action Agenda, a vital part of the new development goal drafting process, is a step towards recognizing the role of international philanthropy and the private sector in supporting global development. The agreement makes several references to the importance of the private sector in economic growth, particularly the role of the financial sector in enabling small businesses. Furthermore, Article 10 of the agreement explicitly lists philanthropies and foundations as vital members of the “global partnerships” that are required to meet the SDGs. This is a substantial improvement over the funding section of the MDGs, which overwhelmingly relied on official development assistance and did not reference to international philanthropy.

However, there is still a lot more that the Addis Ababa Action Agenda and the SDGs could do to support philanthropy’s vital role in development. In June, the CGP cohosted the Conference on Policy Coherence for Mobilizing Private Financial Flows for Sustainable Development with the OECD Development Center. The purpose of this conference was to discuss how to best utilize private funding for the SDGs in the lead up to the Third International Conference on Financing for Development. Dr. Carol Adelman, director of the CGP, provided a number of recommendations, summarized below:

Efforts to measure private financial flows and to publicize philanthropic best practices should be increased

Private and philanthropic actors should be included in drafting the SDGs

Innovation should be the primary criteria for creating public-private partnerships as part of the SDG targets for global partnerships

Philanthropy should be recognized as a unique source of development practices rather just an additional funding source for official development goals

Countries should strive to improve their legal environments for investing in both for-profits and not-for-profits

Intergovernmental organizations should facilitate the distribution of private resources to developing countries by evaluating best practices and identifying successful ventures

Though these suggestions were not explicitly included in the Addis Ababa Action Agenda, countries looking for ways to finance their SDG efforts should still consider them. Many of these suggestions simply entail engaging with the private and philanthropic sectors, and collecting new data. However, some countries may balk at evaluating their legal environments. A major finding of the CGP’s new Index of Philanthropic Freedom is that laws created to serve the legitimate interests of the state, such as capital controls and illicit financial flows legislation, often hinder philanthropic efforts as well. Examining their legal requirements will require states to evaluate the benefits of combating illicit finance or managing volatile financial flows against the benefits that come from international philanthropy.

As Dr. Adelman noted in her comments, 80% of the developed world’s economic engagement with the developing world comes from the private sector, philanthropy, and remittances. The Addis Ababa Action Agenda is an important first step in acknowledging these essential flows and how they can help meet the SDGs. But the international community needs to go further in developing a more holistic funding plan for the SDGs, and the recommendations made at the Conference on Policy Coherence are an excellent place to start.

On April 30, 2013, the Indian Social Action Forum (INSAF)—an umbrella organization of over 700 civil society organizations—received a non-descript notice from the Ministry of Home Affairs that revoked the INSAF’s registration and froze its assets in an effort to allegedly protect “the public interest.” This was not the first time that the INSAF had encountered resistance to its activities. Both the INSAF and its member organizations had often sparred with the Indian government over issues of environmental policy including the construction of nuclear power plants and the legalization of GMOs. Thanks to an ambiguous new section of the legal code, however, the Indian government has the authority to freeze assets and rescind the registration of organizations that receive unapproved foreign funds and/or pose a threat to “the public interest.” The true motivation behind the deregistration of the INSAF was immediately obvious to the organization’s leadership: they were being targeted for their activism.

The notice delivered to the INSAF in April was issued in accordance with Sections 13(1) and 14(1-2) of the Foreign Contribution Regulation Act of 2010. Based on an older 1973 law designed to shore up foreign currency reserves, the ambiguity of the amended FCRA allows for nefarious government overreach. Section 13(1) states: “Where the Central Government, for reasons to be recorded in writing, is satisfied that pending consideration of the question of canceling the certificate on any of the grounds mentioned in sub-section (I) of section 14…[it may] suspend the certificate for such period not exceeding one hundred and eight days.” Section 14 is more severe: “The Central Government may, if it is satisfied after making such inquiry as it may deem fit cancel the certificate if, in the opinion of the Central Government, it is necessary in the public interest to cancel the certificate…”

Objecting particularly to the ambiguity of Section 14, and drawing significant support from the American Bar Association’s Center for Human Rights as well as the international CSO community, the INSAF filed a strongly worded petition with the High Court of Delhi. In September, five months after the Ministry’s notice had been delivered to the INSAF, the High Court finally dismissed the deregistration and thawed the organization’s accounts. The FCRA, however, was upheld.

The attack on the INSAF was just the beginning. In the last two years, Modi’s government has used the FCRA to target thousands of CSOs that have criticized government policies. On June 9, 2015, 971 organizations, including several prominent public universities and local chapters of international NGOs, were stripped of their registration for accepting unapproved funds. Greenpeace activist Priya Pillai, herself a recent victim of FCRA regulations, noted that “The issue is not related to the source of our funding or FCRA. It is a larger political issue under which NGOs are being targeted and persecuted for working, as well as, raising the voice of the poor, weak, and the deprived.” Ms. Pillai is partially correct. While the government’s use of the FCRA is, indeed, a reflection of larger political issues, repeal of the amended FCRA would be an appropriate first step on the road to philanthropic freedom in India.

In the 2015Index of Philanthropic Freedom, India maintains a mid-range composite score of 3.2, but in the area of cross border flows it scores just 2.1 out of a possible 5. In his justification of this low score, Noshir Dadrawala of the Centre for Advancement of Philanthropy emphasized the onerous requirements of the FCRA: “It is important to note that no CSO operating in India whether registered or not can receive foreign contributions without first obtaining prior permission from the Home Ministry.” In order for civil society to thrive and international philanthropic funds to flow into India, the government must amend the FCRA and end its attack on the third sector.

In November 2014, the Charities Aid Foundation published its annualWorld Giving Index,which measures and ranks global giving behaviors. In the report, China was ranked 128 out of 135 countries. Last year, China was also criticized by Reuters because few wealthy Chinese citizens donated publicly to fight the spread of the Ebola. And back in 2010, Bill Gates and Warren Buffett’s invitation to charitable giving, known as the Giving Pledge, was turned down by many of China’s millionaires.

At first glance, it might seem fair to say that China, the world’s second-biggest economy, is lacking a philanthropic culture, and that its people are reluctant to donate to charitable causes. But maybe we should examine what several wealthy Chinese citizens said about their giving behaviors.

When asked for his opinion on the Giving Pledge, Charles Zhang, the Founder and current CEO of Sohu Inc., said he would not follow the same donation model that Bill Gates used. Instead, he preferred to pay more money in taxes to the government, because he believed that this was also philanthropy, and the best way of helping the poor. Charles Zhang is not the only one who feels this way. Last year, the World Food Program called on Chinese firms to donate more to fighting Ebola. Deborah Brautigam, director of the China Africa Research Initiative, said “It’s likely that state-owned firms would prefer the Chinese government to take a lead on this…They’re unlikely to come forward independently and would assume the government, which does have experience in contributing for emergencies, will be better at knowing what to do.”

Since childhood, every Chinese citizen has been taught to emulate their ancient role models who would gladly be “the first to bear hardships before everybody else and the last to enjoy comforts.” Showing concern for the country and its society is the essence of Confucianism. It encourages people to commit themselves to the welfare of the society when they are successful, and to stay disciplined when they are in distress. Confucius taught people to contribute to welfare through government. He believed people should “cultivate his personal life, regulate his family, and then govern his state; when all the states are well governed, that person brings peace and harmony throughout the world.” Cosmopolitanism exists in Chinese culture, but there is little initiative on how to help others as a third party outside the government. This phenomenon is rooted in the social structure of China.

The current social structure in China is focused on a strong state and weak society. China’s lack of philanthropic culture is largely due to heavy restrictions on civil society. People are accustomed to relying on the government, resulting from the government’s unlimited power in the past. The public always expects and trusts their government to solve social problems. Such inertia in thinking impedes social engagement. Unlike the “necessary-evil” political tradition in the west, the state is “the good” for the Chinese. Owing to people’s unawareness and inability, civil society grows slowly in this “acquaintance society.” However, is a thriving civil society really necessary to create a philanthropic culture? Myanmar was ranked first in the Index with restricted civil society.

Those who help others are always noble, however minuscule their contributions are. But it is equally important to seek out the for reasons behind people’s behaviors, rather than merely criticizing them. Hopefully, there will be changes in China. Jack Ma, the co-founder of Chinese e-commerce giant Alibaba, is pouring much of his personal wealth into the creation of philanthropic trusts, which represents 2% of the company’s current equity (roughly $3 billion). This might be the dawn of a new era of giving among China’s freshly minted billionaires.

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With the end of the Millennium Development Goals in sight, there was much consternation about whether the MDGs would be a success. Even more important, there was more introspection among the the aid community about how to deliver their aid more effectively. From this soul-searching sprang the High Level Fora on Aid Effectiveness. After meetings in Paris, Accra, and Busan, a new agenda was adopted to include more country ownership of development, focus on results, inclusive partnerships, including civil society organizations and the private sector, and transparency and accountability.

Logo for the Global Partnership for Effective Development Co-operation

These meetings did not end with Busan. Recently in Mexico City, the First High Level Meeting of the Global Partnership for Effective Development Cooperation (GPEDC) was convened on April 15-16th. For the most part, the GPEDC reaffirmed their goals and principles, along with collaborating with other organizations, such as the United Nations Development Cooperation Forum. A large portion of increased advocating was centered on transparency, civil society organizations, and a stronger emphasis on results-based approaches. The GPEDC increasingly recognizes that Middle Income Countries (MIC) still contain sizable populations of poverty, necessitating plans and strategies to continue aid to MICs in more targeted ways. They also increasingly recognized the importance of South-South cooperation, business, and philanthropic organizations.

Participants at the GPEDC, including co-chairs Ngozi Okonjo-Iweala (third from left), Justine Greening (third from right) and Armida Alisjahbana (second from right)

Another voluntary initiative announced at GPEDC was the Guidelines for Effective Philanthropic Engagement. This initiative, supported by the OECD Global Network of Foundations Working for Development (netFWD), European Foundation Centre (EFC), Stars Foundation, UNDP, and Worldwide Initiative for Grantmakers Support (WINGs) is set of voluntary, non-binding guidelines to aid collaboration between philanthropies and other stakeholders, including governments. These guidelines are grouped under three main themes: dialogue, data & knowledge sharing, and partnering. For dialogues, the initiative focuses on engaging in multi-level dialogues with all stakeholders while focusing on philanthropic foundations’ comparative advantage of risk tolerance and responsiveness. The initiative also emphasizes sharing data and knowledge between philanthropic organizations and governments about spending, inputs, due diligence assessments, impact evaluations, and others. Lastly, the Guidelines for Effective Philanthropic Engagement acknowledges the varied nature of philanthropic organizations, from large foundations like the Gates Foundation to small local foundations. Therefore, the Guidelines emphasize engaging in more partnerships and empowering local partners, utilizing all the tools available to philanthropic organizations to leverage the comparative advantage of each partner.

This was the first of many meetings that should be taking place over the future. 38 voluntary initiatives is a large amount to carry out. Many of them are commendable goals, including the Development Impact Bonds and the Guidelines for Effective Philanthropic Engagement. As these are voluntary and non-binding, only time will tell of the efficacy and sustainability of everything undertaken, but it’s an interesting and promising step forward.

On Thursday, April 17, the Center for Global Prosperity had the pleasure of hosting an event, “Philanthropy for Civil Society in Pakistan”, with CEO of the Aga Khan Foundation, Dr. Mirza Jahani, Chairman of the Pakistan Centre for Philanthropy, Shamsh Kassim-Lakha, and CGP’s Director Carol Adelman. The panelists spoke on topics ranging from the recent growth of civil society in Pakistan to the impact of economic development on future philanthropy.

One very interesting point Lakha made was the pervasiveness of a giving culture in Pakistan and the importance of leveraging that community giving to strengthen civil society. He spoke about how Muslim culture has an ethos of giving that Pakistanis take very seriously. According to Lakha, approximately 80% of Pakistanis participate in some form of philanthropy, whether it be through monetary donations, volunteering, or both. These are levels equal to the US, one of the most philanthropic populations in the world. To further illustrate his point, he spoke of how 28% of those participating in philanthropy live on $2 a day.

Throughout the discussion, Lakha placed special emphasis on the growing role of civil society. He claimed that as Pakistani civil society develops, citizens would increasingly rely on it to fill the government gap in providing social services. Because of this, Pakistan must find a way to leverage the philanthropic culture to promote civil society growth. It is not enough to just participate philanthropy, Pakistan must find a way to develop and apply this philanthropic culture in a systematic and effective way.

Dr. Jahani made an intriguing comment on the current organization of philanthropy in Pakistan. He claimed that it fell into two camps: pure philanthropy and pure investment. He argued that in order to leverage the philanthropic culture, Pakistan must find a way to fill the gap between these two approaches. Both philanthropy and investment are needed in the development of civil society but often seem to be at odds. Philanthropy has the perception of being perfectly altruistic while investment is about the investor’s monetary returns. How can these two approaches that seem at complete odds work in conjunction with one another?

Some argue that impact investment could be the connection between pure philanthropy and pure investment. Simply stated, impact investment is strategic investments companies make for financial gain that also have a social or environmental improvement goal. Impact investment gained popularity last year when it became a focus at the G8 Social Impact Investing Conference and the Aga Khan Foundation has had an impact investment initiative since 2011. In 2012 alone, companies donated more than $8 billion to impact investment. It is a way for companies to increase profits while also earning public goodwill.

Because impact investment primarily occurs through private corporations, the concept connects strongly to the economic development of Pakistan. During the discussion, Lakha pointed out that the economies of developing nations are growing at a faster rate than those in high-income countries. This means an increase in overall philanthropy and investment in Pakistan. He argued that corporate philanthropy is becoming increasingly important and will be critical to the development of a strong civil society. While an increase in philanthropy is a desirable trend, through impact investment Pakistani corporations could scale up the impact and returns of its investments through a single action. If Pakistani corporations catch on to the impact investment trend, Pakistan might see a large increase on its returns on investment, both on the economic and social ends. Now the country must figure out the best approach to encouraging impact investment.

If you would like to listen to the entire discussion on “Philanthropy for Civil Society”, please click here.

The Center for Global Prosperity is focused on educating policy leaders and the general public on the crucial role of the private sector (both non and for profit) as a source of economic growth and prosperity around the world. To accomplish this central mission, the Center produces The Index of Global Philanthropy and Remittances, which identifies the sources and amounts of private giving around the world and The Index of Philanthropic Freedom, which identifies the barriers and incentives to private giving in 64 countries.